March 19, 2020
Five main factors make up your credit score. These are payment history (35%), credit utilisation (30%), credit history length (15%), credit mix (10%) and new credit (10%). Your credit report is usually updated once a month.
Having missed payments can harm your credit score. Having as little as one missed payment can have a negative effect, but several will unmistakably damage it further. Companies that are aware of your missed payments may be unwilling to approve your application, as they don’t trust their payments will be made on time.
Companies prefer to see your credit utilisation around 25% – any higher may imply that you are too reliant on credit. The company you are applying with may come to the decision that you cannot handle any more credit, therefore won’t approve you for any more.
Making numerous applications in a short space of time may hurt your credit score as it can suggest you have been declined for credit with each company.
Negative information, such as bankruptcy and repossession, can stay on your credit file for years. A default on your account shows that you have previously struggled to repay credit which makes you a much higher-risk customer.
There are two main types of credit: revolving credit and instalment credit. You can use revolving credit again – re-using your credit card once you have paid it off. You cannot re-use instalment credit, such as a loan. Companies also like to see you using various types of credit – for example, a credit card, a mortgage, car finance and a student loan. A low credit mix can imply that you can’t handle any more.
Your social media score will be accessible to some companies, therefore having a weak social score may influence a company’s decision when deciding whether to lend to you.
To check your social media score, head over to Notty here: https://www.notty.co.uk/.
To find out what’s good for your credit score, check out our previous blog!